Charter Hall Retail REIT (CQR)

UBS has maintained its “neutral" rating and $3.22 price target on Charter Hall Retail REIT following news the company and Telstra Super have agreed to acquire eight shopping centres from Woolworths for $266 million, with completion scheduled for June 2011.

The broker says the transaction will marginally enhance financial year 2012 earnings, but says that, more importantly, it further re-weights the portfolio to domestic shopping centres with a strong tenant covenant in Woolworths.

Deutsche Bank notes that Woolworths businesses should now account for more than 51 per cent of Charter Hall Retail’s base rent, and views the acquisition as positive. The broker has increased its price target to $3.30 from $3.25 and is maintaining its “hold" rating. It estimates that the acquisition will add 0.7 per cent to earnings growth for the financial year 2012, taking total growth to 2.5 per cent.